Core Insights - FrieslandCampina has appointed Zhang Zhanhong as the new president of its professional nutrition division in China, effective November 1, 2024, bringing over ten years of experience in managing infant formula brands in the Chinese market [1][2] - Zhang has emphasized a strategic framework focused on "focus, agility, and cohesion" to strengthen the core business [1] Market Position - FrieslandCampina's brand, Royal FrieslandCampina, has become the top-selling single SKU in China's infant formula market, with over 10 million cans sold in 2024 [3] - The company holds the third-largest market share in the infant formula sector in China, leading among international brands [3] Sales Performance - In 2024, the Chinese infant formula market experienced a 9.8% decline in offline sales, with a 9.4% drop in volume and a 0.3% decrease in average price [4] - Despite the overall market decline, FrieslandCampina's professional nutrition segment saw a 6.0% revenue increase to €1.218 billion (approximately ¥9.277 billion) and a 16.4% rise in operating profit to €227 million (approximately ¥1.729 billion) [9] Birth Rate Impact - The decline in marriage registrations in China, down over 20% in 2024, suggests a continued decrease in newborn numbers [5] - However, the birth rate saw a slight recovery in 2024, with 9.54 million newborns, ending a seven-year downward trend, which positively impacted the infant formula industry [9] Market Trends - The infant formula category's growth rate improved from -5.9% in 2024 to -0.8% in Q1 2025, with segments one and two showing positive growth [10] - The ultra-premium segment has become mainstream, with the ultra-premium+ market growing by 13.3% in early 2025 [13] Strategic Focus - FrieslandCampina plans to leverage its milk source advantages and enhance product quality through increased R&D investment and new product launches [16] - The company aims to balance channel strategies, ensuring cooperation with partners for mutual benefits [20] Pricing Strategy - FrieslandCampina is focused on maintaining price consistency across online and offline channels to avoid competitive pricing pressures [21] - The company does not plan to adjust its product mix or pricing strategy significantly [21] Competitive Landscape - Domestic brands like Yili and Feihe are utilizing birth subsidies to promote their ultra-premium products, which has affected market pricing dynamics [23] - FrieslandCampina is evaluating solutions to align its product offerings with consumer needs, potentially influencing birth rates [24][25]

Core Viewpoint - The infant formula market is undergoing significant changes, with a shift towards ultra-premium products driving growth, while overall market dynamics are becoming increasingly competitive and polarized [1][6][7]. Group 1: Market Trends - The infant formula market is projected to grow by 2.3% year-on-year in the first four months of 2025, with offline sales declining by 1.4% and online sales increasing by 12.3% [1]. - The ultra-premium segment is a key growth driver, with the ultra-premium+ market growing by 13.3% year-on-year, while the ultra-premium market itself declined by 4.8% [2]. - The market share of the ultra-premium+ segment reached 33.2%, with the ultra-premium segment at 31.2% [2]. Group 2: Company Performance - FrieslandCampina's Royal FrieslandCampina product became the best-selling single SKU in China, selling over 10 million cans in a year [2]. - Feihe's revenue reached 20.75 billion yuan in 2024, with a 6% year-on-year growth, and its ultra-premium product line saw sales increase by over 60% [3]. - Feihe holds a 17.5% market share, ranking first in the domestic market [4]. Group 3: Competitive Landscape - The competition between domestic and foreign brands in the infant formula market is intensifying [6]. - Foreign brands like Danone and Nestlé have reported significant growth in their Chinese market shares, with Danone's Aptamil series performing particularly well [10]. - The birth rate in China saw a slight increase in 2024, with 9.54 million newborns, which is expected to positively impact the infant formula industry [11]. Group 4: Consumer Behavior - Consumers are increasingly willing to spend on high-quality products, which is reflected in the growing trust in domestic brands [14][28]. - The average price of infant formula in China is relatively high compared to other countries, indicating a lower sensitivity to price among consumers [25][27]. Group 5: Strategic Approaches - Domestic brands like Feihe and Yili are implementing fertility subsidies to stimulate market growth, with Feihe planning to invest 1.2 billion yuan in subsidies [18][19]. - FrieslandCampina is focusing on maintaining a balanced and cautious approach to pricing and channel strategies, aiming for price consistency across online and offline platforms [21][22][23].

Core Insights - FrieslandCampina's Chinese professional nutrition business has achieved double-digit growth for four consecutive years and expects to continue this trend in 2024, with a focus on stable growth rather than aggressive expansion strategies [1][3][4] - The company has successfully launched high-end products, such as the organic Royal FrieslandCampina series, which has exceeded sales expectations, indicating strong consumer demand for premium offerings [3][9] - The adult nutrition segment is approached cautiously, with the company prioritizing market penetration and consumer elasticity before entering this category [1][6] Group 1: Business Performance - FrieslandCampina's first-quarter performance significantly exceeded expectations, reinforcing confidence in achieving double-digit growth for the full year [3][4] - The Royal FrieslandCampina Stage 3 product sold over 10 million cans last year, making it the top-selling SKU in the domestic infant formula market [3][4] - The company is increasing its investment in understanding Chinese consumer needs and accelerating new product launches [3][4] Group 2: Market Trends - The infant formula market saw a decline of 5.9% last year, but the first quarter of this year showed a reduced decline of only 0.8%, indicating signs of recovery [7] - High-end products are driving growth in both infant and adult nutrition segments, with increased competition in the premium category [4][6] - Other brands, such as Danone and Nestlé, are also reporting growth in their infant nutrition segments, reflecting a broader market recovery [5][6] Group 3: Strategic Focus - FrieslandCampina aims to avoid aggressive pricing strategies and instead focus on channel management and maintaining product freshness [7][8] - The company is building a robust distribution network covering 30 provinces and over 30,000 small and medium-sized stores [7] - There is a strategic emphasis on adult nutrition products, particularly targeting mothers, with plans to leverage existing retail relationships to expand this segment [9][10]